Finance Minister looks to empower Antony on defence
deals.
Saubhadro Chatterji .
New Delhi March 01, 2010, Perturbed at the delays in defence
acquisition that cause the surrender of large sums of money
every year, the finance ministry has mooted a change in policy
that will empower Defence Minister A K Antony to clear defence
projects up to Rs 1,000 crore, bypassing the Cabinet Committee
on Security (CCS).
A note from the finance ministry to this effect is likely to be
sent for Cabinet clearance in a few days.
Currently, the defence minister is allowed by the Cabinet to
clear projects up to Rs 200 crore without having to bring it
to the Cabinet or CCS. For orders up to Rs 500 crore, the
concurrence of the finance ministry is sufficient. Now, the
finance ministry wants to raise the limit to Rs 1,000 crore to
speed up the acquisition process by financially empowering
the defence minister and giving him a larger measure of
autonomy, in consultation with it.
A senior defence ministry official said: “If this proposal is
accepted, it will solve the problem of delays in acquisition
to a large extent.”
Because funds are not used by the defence ministry on time,
the allocations lapse and have to be returned. In the 2009-2010
Budget, the defence ministry returned nearly Rs 7,000 crore
unutilised to the Consolidated Fund of India. In January this
year, the Indian Air Force’s (IAF’s) had a plan to expand its
capabilities but suffered a blow when the defence ministry
cancelled a tender worth around Rs 6,000 crore for procuring
six air-to-air refuelling aircraft, after the finance ministry
objected to the price of the aircraft chosen by the IAF. It took
two years to negotiate the contract.
India needs 200 light, multi-role helicopters for the army and
the air force and several hundred motorised and towed
155-mm 52-calibre artillery guns. Projects to buy 126 medium
multi-role combat aircraft, 8,400 light specialist vehicles,
140 ultra-light 155-mm 39-calibre and tactical communication
system are already in the pipeline.
Government managers say the defence minister should not be
blamed for the delays. “Antony is conscious that he is dealing
with public money. This is a sensitive ministry. And Antony is
trying to keep it corruption-free. You can’t blame him for that,
” said a senior minister of the United Progressive Alliance.
With a spending cap enhanced to Rs 1,000 crore, it will be
harder for the defence ministry to put off spending money.
In January, a high-powered committee constituted to look into
the defence spending had recommended numerous reforms
such as increasing the foreign direct investment limit in the
defence sector to 49 per cent, divestment of defence public
sector units and increasing the defence minister’s financial
powers up to Rs 500 crore to telescope the arms acquisition
process in the ministry.
The Defence Expenditure Review Committee was headed by
former secretary (defence finance) V K Misra and had former
senior officers of all three arms of the armed forces.
Not only had the committee recommended increasing the FDI
limit in the defence sector to 49 per cent from 26 per cent but
also called for a case-by-case waiver up to 74-100 per cent. It
had called upon the private sector to take over foreign defence
firms and establish a self-governing wealth fund to facilitate
this activity.
Dear Veterans,
This is a welcome step being taken by the Finance ministry.
Let us see now, what action is taken by the Govt.to disburse
the amount allocated in the last budget for grant of Modified
Parity in Pension to veterans (JCOs and below).
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